Estate Planning
Personal Wealth Management
Group 6
Shagun Gourisaria, 211133
Shantanu Mittal, 211134
Sonal Sharma, 211141
T N V M Ravindra Mohan, 211146
What is an Estate?
Real
Assets
Personal
Assets
Estate
What is Estate Planning?
Individual arranges the transfer of assets to the legal heirs
This is done to protect the needs of the loved ones in case of his/her death or
some disability
It includes the distribution of the real and personal property of an individual
to his/her heirs
Aim is to preserve the maximum amount of wealth possible for beneficiaries
and flexibility for the individual prior to his death
Objectives of Estate Planning
To develop a plan detailing of ones wishes as to how to use and
distribute the wealth
To prepare for future illnesses, disability or retirement
To transfer property to intended, rather than unintended,
beneficiaries both before and after death
To ensure tax deduction on such transfer of wealth
Business succession organized succession or winding up can be
defined in case of an individual handling business
Time of distribution can be pre decided : individuals having minor
children may wish to transfer the assets only after the children
attain a certain age , to avoid misuse that may happen due to
lack of maturity and discretion
Objectives Continued
Selection of trustee or guardian or executor : An individual needs
to be appointed to carry out functions like
To pay for funeral expenses
Paying all the expenses and outstanding debts
Arranging for filing tax returns
Ensuring all the benefits due to the deceased such as life
insurance, pension and other benefits are received
Applying for probate
Distribution of assets to the beneficiaries as per individuals
wish
To provide for the guardianship of minor children upon death or
incapacity
Estate Planning vs. Real Estate
Planning
Estate Planning = Real Estate Planning
Estate = Real Estate + Investments + Insurance Policies +
Savings + .
Parties to Estate Planning
Testator (Individual whose
asset has to be
transferred)
Lawyer
Beneficiary
Life insurance companies
Executor
Banks
Tax advisor
Courts
Witness
Tools of Estate Planning
During the Lifetime
Trust
Power of
Attorney
Testamentory
Living
Revocable
Irrevocable
Gift
Partition
Benefits of Trust
Trust is a non-probate and private instrument
Assets in an irrevocable trust are protected from the
settlors creditors
A trust can be structured to distribute assets to a
beneficiary periodically
A trust can ensure the right person benefits from the
assets
Gifts: Under Income Tax
In the Income Tax Act 1961 under section 56 (2),any gifts
received by any individual or Hindu Undivided Family (HUF) in
excess of Rs. 50,000 in a year would be taxable.
Exemption from Gift Tax:
The gift being given by a blood relative, irrespective of the gift
value
Immovable properties located outside the country
Gifts received from relatives on the occasion of marriage
(including gifts received by daughter-in-law from parents-inlaw; but excluding gifts received by son-in-law from parentsin-law)
Gifts received by way of a will and inheritance
NRIs gifting parents in India from their NRE account
Tools continued
Post- Death
Succession
Unpriviliged
Will
Joint
Mutual
Life insurance
Conditional
Priviliged
Differences
Will
Gift
Transfer of assets takes place after
Transfer of assets during the life
the death of the testator
time of the testator
Revocable
Irrevocable
Testator has the ownership of the
Ownership is transferred to the
assets
Not risky
beneficiary
Risky since a person gives all his
assets during his lifetime
Differences
Will
Nomination
The beneficiary is the sole owner of
The nominee is not the sole owner
the assets
of the assets
The other beneficiaries cannot make The other heirs can make a claim on
a claim in the assets not transferred
the assets transferred to the
to them.
nominee
Key Issues to be considered in
estate planning
Who do you wish to be the executor of your estate?
Who do you wish to be your Power of Attorney?
Who would you wish to be the Guardians of your minor children?
Do you expect there to be any challenges to your wills?
Are there any particular assets which you would like to leave to
specific family members?
The will prepared, hand written or typed, should be legible.
Do you need the help of a legal professional?
Is will overriding the natural succession of natural wealth?
Are assets being bequeathed to people other than natural heirs?
Are the witnesses chosen carefully?
How to bequeath your digital assets?
Estate Planning Process
A financial planner performs the following steps:
Relationship establishment
Information gathering
Determining the clients financial status
Draw out a plan of transfer
Implementing the plan
Regular reviewing of the plan
Risk Involved in Estate Planning
Huge costs of transfer and taxes might be incurred if planning is not
properly
Inadequate information while planning might result in intended
beneficiaries to take up legal process in order to possess the assets of the
individual
Absence of smooth transition and functioning of assets after the individual
expires might result in depreciation of value of assets
An individuals wishes on how his/her assets are to be distributed may not
be fulfilled
There may be insufficient liquidity to meet the individuals debt
obligations and taxes
An individuals family may be in financial distress if the process is not
planned properly
Risk Mitigation Strategies
Identifying various scenarios/ events which could require Estate planning
such as divorce, disability, death etc.
Identifying specific goals and determining them
Making a checklist of assets and liabilities, beneficiaries, executor and
other aspects of Estate planning
Consulting to aging parents and other beneficiaries about Estate planning
Reviewing the plan periodically while updating to new tax laws and
legislations
Establishing benchmarks to evaluate the plans success
What is a Will?
The legal instrument expressing a persons wishes and directions
as to the disposition and distribution of his/her property after
death.
We can make the will on plain paper in India. Its not legally
necessary to make the will on stamp paperious
Previous will can be edited as many times a person wants
through a codicil or making a new one
Who is Eligible to Make a Will?
Major
Sound mind
Willing to write a Will
A Will can be made by the deaf and dumb person by showing
consent through writing or gestures in sign language.
A prisoner or alien in India can also draw a Will.
When to Make a Will?
First step in our financial life
Now
Why to make a Will?
Make a provision for a
close friend or a
faithful servant
Estate is not
automatically passed
on to the spouse
Inconvenience caused
to our family members
Choosing the executor
of our estate.
Appointing a guardian
for our minor children
or other individual who
requires guardianship.
Allowing us to choose
in advance how we
want our property to
be distributed.
Designating a
successor custodian in
cases where we are
serving in a custodial
capacity for a minor or
special-needs adult.
Providing for
individuals who would
otherwise not have
been eligible to
receive property we
leave behind.
A will can also allow us
to donate property to
charities of our choice
and choose the assets
that would be used in
the donation
Sample Will: 4 Parts
1. Declarations
1. I, the undersigned ____________________ aged about ___ years,
_________________ by profession, residing at __________________.I
hereby revoke___________________________________________,
hereby make my Will, any other Will or Wills of earlier dates
that may beclaimedto be in existence, I state that I am in
soundinmind and I am making this will because I do not wish
to cause difficulties to my beneficiaries by dying intestate. I
make this will on my own and without pressure or influence
from anyone. I ammarriedto
______________________________________; I have ____ children, one
son __________________________ and
onedaughter_______________________, hereinafter referred to as
my children.
Sample Will: Cont.
2. Assets and properties
owned
By thisWill and TestamentI bequeath to my son
___________________ anddaughter_______________________, my plot
of land situated at __________________________________ and other
contents therein all of which they may divide into two equal parts,
as near as may be as per their mutual agreement. They shall have
absolute ownership and possession of this property, where I at
present reside, and may dispose of it in whatever manner they
desire, during their lifetime, and thereafterthe propertyor
whatever is left of it shall pass to their heirs or designated
inheritors
Sample Will: Cont.
3. Distribution of the
properties
The remainder of my assets moveable and immovable shall be
divided into two equal parts, as near as may be. One part I
bequeath to my son __________________________ and the other to
mydaughter_____________________________. These properties may
be utilised as may be deemed fit by my children
____________________ and _______________________ and by their
inheritors or heirs after them. In the event of premature demise
of any of the legatees, the properties allotted to them shall pass
to their children and if there are no surviving children, these
properties shall pass in equal measure to their heirs or
designated inheritors.
Sample Will: Cont.
4. Signatures
I appoint _____________________________ who has accepted the
responsibility, as the executor of this will. He may /may notrelegate
thisfunctionto any other person of his choice, ifrequiredor desired.
Signatureof _______________________ (Testator)
(Name of Testator)________________________, in our presence, signed
thisinstrumentafter declaring to us that it is her/his Will and we
now sign in her/his presence and of each other as witnesses on this
above written day and year.
Signatureof witness: 1.
Name: _________________________ Address _______________________
Signatureof witness: 2
Name: _________________________ Address _______________________
